Quick overview
FATCA (Foreign Account Tax Compliance Act) and FBAR (Report of Foreign Bank and Financial Accounts, FinCEN Form 114) are both designed to detect offshore tax evasion, but they work differently. FATCA is enforced through the tax code and uses IRS Form 8938 attached to your federal income tax return. FBAR is an anti-money‑laundering requirement filed electronically with the Financial Crimes Enforcement Network (FinCEN). Both can apply to the same taxpayer and the same accounts — and both can trigger civil and criminal penalties for non-compliance (IRS; FinCEN).
Sources: IRS FATCA guidance (https://www.irs.gov/individuals/international-taxpayers/foreign-account-tax-compliance-act-fatca); FinCEN/FBAR guidance (https://www.fincen.gov/report-foreign-bank-and-financial-accounts).
How FATCA and FBAR differ
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Who you file to
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FATCA: IRS with your federal tax return (Form 8938). (IRS)
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FBAR: FinCEN electronically via BSA E-Filing System (FinCEN Form 114). (FinCEN)
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Thresholds (general summary)
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FBAR: $10,000 aggregate balance at any time during the calendar year — this is a low, objective threshold that applies to U.S. persons. (FinCEN)
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FATCA (Form 8938): Higher thresholds tied to filing status and residency. Typical thresholds for taxpayers living in the U.S. are $50,000 on the last day of the tax year or $75,000 at any time during the year for single filers; $100,000/$150,000 for married filing jointly. Taxpayers living abroad have higher thresholds (e.g., $200,000/$300,000 single; $400,000/$600,000 MFJ). See the current Form 8938 instructions for exact, up-to-date figures. (IRS)
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What to report
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FBAR: Foreign bank accounts and other foreign financial accounts (including custodial accounts and foreign mutual funds) when aggregate balances exceed the threshold; reported by account (FinCEN).
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FATCA (Form 8938): Specified foreign financial assets — foreign financial accounts, certain foreign stock and securities, partnership interests, and some foreign financial instruments. Some assets may be reportable on one form but not the other.
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Filing window
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FBAR: Filed electronically by April 15 with an automatic extension to October 15 (FinCEN provides an automatic extension).
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FATCA: Filed with your federal tax return (due date April 15, with normal tax extensions applying to the return and therefore to Form 8938).
Who is affected
- U.S. citizens and resident aliens (green card holders and people meeting the substantial presence test).
- U.S. entities like corporations, partnerships, trusts, and estates in some cases (FBAR rules include entities where a U.S. person has signature authority; FATCA can reach certain foreign trusts and entities depending on ownership).
- U.S. persons with signature or other authority over foreign accounts may have FBAR obligations even if they do not own the accounts. (FinCEN)
Example: A U.S. citizen working abroad who holds one bank account with $25,000 and a separate brokerage account with $40,000 has met the FBAR threshold (aggregate $65,000) and likely must file FBAR. They may also need to file Form 8938 if those assets meet the FATCA thresholds for their filing status.
Practical steps to determine your obligations
- Gather year-end and peak balances for all foreign accounts (bank, investment, retirement, custodial) and balances at any point during the year.
- Add balances to determine if the FBAR $10,000 aggregate threshold was exceeded at any time during the calendar year.
- Compare your total specified foreign financial assets to the Form 8938 thresholds for your filing status and residency.
- Check special rules: signature authority, jointly held accounts, foreign entities, trusts, and foreign retirement plans — each may change reporting duties.
- If in doubt, consult a tax professional experienced with international reporting or use voluntary correction programs. See FinHelp’s guides on FBAR vs. Form 8938: What to File for Foreign Financial Accounts) and Streamlined Foreign Offshore Procedures).
Note: Keep contemporaneous records (account statements, year‑end balances, tax return copies) for at least six years; many practitioners keep them longer for audit defense.
Common filing mistakes and how to avoid them
- Mistake: Treating FBAR and FATCA as the same. Fix: Understand they are separate filings to different agencies with different thresholds.
- Mistake: Forgetting joint accounts — each U.S. owner must count the full account balance toward their FBAR threshold. Fix: Report joint accounts and coordinate with co‑owners.
- Mistake: Ignoring signature authority. Fix: If you have signature authority over a foreign account but do not own it, you may still need to file FBAR.
- Mistake: Assuming inactivity equals exemption. Fix: Closed or dormant accounts still require reporting for periods when balances exceeded thresholds.
- Mistake: Missing crypto nuances. Fix: Crypto held solely in self-custodied wallets (private keys you control) is generally not an ‘‘account’’ for FBAR or Form 8938; however, assets held on a foreign exchange or at a foreign financial institution typically are reportable. Check the latest IRS and FinCEN guidance for digital asset updates.
Penalties, enforcement, and defense options
Penalties can be steep: FBAR civil penalties historically include fines up to $10,000 per non-willful violation and for willful violations the penalty can be the greater of $100,000 or 50% of the account balance at the time of violation. FATCA’s Form 8938 penalties include an initial $10,000 failure-to-file penalty with additional penalties (for continued failure) and potential accuracy-related penalties on the underlying tax return. Criminal penalties are possible in extreme, willful cases. (FinCEN; IRS)
If you discover missed filings, consider the following corrective paths depending on facts and whether non-compliance was willful:
- Delinquent FBAR Submission Procedures (for those who have a reasonable cause and no enforcement contact).
- Streamlined Filing Compliance Procedures (for non-willful conduct by taxpayers living in or outside the U.S.). See FinHelp’s Streamlined Foreign Offshore Procedures).
- Voluntary Disclosure Practice (for potentially willful conduct; requires professional representation).
Choosing the right remedy requires a fact-by-fact review. In my practice I’ve seen well-prepared streamlined submissions close cases with moderate penalties and avoid criminal referral, but willful cases often require negotiation and may carry larger financial consequences.
Real-world examples (condensed)
- Expat with multiple small accounts: A U.S. expat with five small accounts that together exceed $10,000 must file FBAR even if each account is under $10,000. They may or may not meet Form 8938 thresholds depending on totals.
- Inherited foreign account: Inheriting a foreign account that pushes you over the threshold obligates you to file FBAR and may trigger Form 8938 reporting. Prompt disclosure is the right first step.
- Cryptocurrency on a foreign exchange: A U.S. person holding crypto on an overseas exchange should treat that account like other foreign accounts for FBAR/Form 8938 purposes; self-custodied crypto without a foreign custodian is treated differently.
Recordkeeping and documentation checklist
- Annual statements for each foreign account (including peak balance dates).
- Account opening documents and beneficiary designations for trusts.
- Brokerage statements and year-end summaries.
- Documentation of how values were converted to USD (exchange rates and dates).
- Copies of previously filed Forms 8938, Form 114 (FBAR confirmation), and related tax returns.
When to hire a professional
Hire an international tax specialist if you have: complex foreign trusts or corporations, unanswered IRS/FinCEN notices, potential willful non‑compliance, or crypto held on foreign platforms. A qualified advisor can run balance analyses, prepare corrected filings, and help choose the right disclosure pathway.
Helpful internal resources on FinHelp:
- FBAR vs. Form 8938: What to File for Foreign Financial Accounts (https://finhelp.io/glossary/fbar-vs-form-8938-what-to-file-for-foreign-financial-accounts/)
- Form 114 — Report of Foreign Bank and Financial Accounts (FBAR) (https://finhelp.io/glossary/form-114-report-of-foreign-bank-and-financial-accounts-fbar-2/)
- Streamlined Foreign Offshore Procedures (https://finhelp.io/glossary/streamlined-foreign-offshore-procedures/)
Final checklist before filing
- Did you aggregate all foreign accounts and confirm FBAR threshold?
- Did you compare your assets to the Form 8938 thresholds for your filing status?
- Are accounts held in names of foreign entities or trusts properly analyzed for beneficial ownership and reporting?
- Do you have documentation to support reasonable cause if needed?
Professional disclaimer: This article explains general rules and examples and does not replace personalized tax advice. Rules change; consult the IRS (https://www.irs.gov/) and FinCEN (https://www.fincen.gov/) or a qualified international tax professional for advice tailored to your situation.
Authoritative references
- IRS — Foreign Account Tax Compliance Act (FATCA) overview and Form 8938 instructions: https://www.irs.gov/individuals/international-taxpayers/foreign-account-tax-compliance-act-fatca
- FinCEN — Report of Foreign Bank and Financial Accounts (FBAR), FinCEN Form 114: https://www.fincen.gov/report-foreign-bank-and-financial-accounts
- FinHelp resources: see linked guides above for deeper how-to content.
